In this paper from 2012, you will see growing concerns around the proportion of uninsured and under-insured patients. Another major issue is the high rate of payer denials, and the cost and effort to recover that revenue.

1. Presented by Cory Mann
January, 2012
Market Analysis:
US Hospital Revenue Cycle Management:
Current Strategies & Pain Points
Actionable Market Insight

2. Proprietary – not for distribution
Methodology
 In-depth, 1 hour interviews with hospital finance
executives
 Conducted 11/8 – 12/21, 2011
 31 senior hospital finance executives
– Mostly VPs of Revenue Cycle Management or CFOs
January 27, 2012 p2
Staffed beds Interviews
Less than 200 5
200-499 8
500-999 7
1000+ 11
Total 31
Net patient revenue Interviews
Less than $350M 8
$350-750M 11
$750M-$1.5B 6
$1.5B+ 6
Total 31

3. Proprietary – not for distribution
Payor Mix Consistent Across All Hospital Sizes
Medicare
43%
Medicaid
17%
Managed
Care
33%
Self-pay
7%
Payor Mix Across All Interviews
January 27, 2012 p3
 No variation by net patient
revenue
 Medicare ranged from 30-50%
 Long-term care facility at 92%
 Medicaid ranged from 7-40%
 Managed Care typically 15-50%
 Self-pay ranged from 2-13%

4. Proprietary – not for distribution
CURRENT CHALLENGES &
INSTALLED TECHNOLOGIES
January 27, 2012 p4

5. Proprietary – not for distribution
0% 10% 20% 30% 40%
RAC
Training needs in
registration/admittance
High DAR
5010 HIPAA: Billing changes,
move to bundled payments
Managing high volume of denials
ICD10
Decreasing reimbursements
Insured patient balances growing
Growing proportion of uninsured
RCM Pain Points (Unaided)
Uninsured & High Deductible/Co-pay Are
Biggest Concerns
4 hospitals cited in-house
insurance eligibility efforts:
 “There is high ROI to help people
get county & city insurance
programs. The goal is to avoid
allocating patients to charity.”
January 27, 2012 p5
3 hospitals cited recent or
pending investments in POS
products that will:
 Estimate patient responsibility
amounts
 Forecast patient propensity to pay

6. Proprietary – not for distribution
Majority of Hospitals Claimed Driving Cash Was An
Investment Priority
January 27, 2012 p6
Cost
23%
Cash
36%
Both
41%
Bias to Invest in Tools that Drive…
 Bias towards controlling costs in
hospitals >1000 staffed beds
 No trend by payor mix or net patient
revenue
“Our cash flow process is working well…
Bad debt is the real issue for a CFO.
Converting write-offs to revenue is the
opportunity.”
“We have to do ROI to justify the
investment, but we focus on cash
collections as a top dashboard goal.
Second is denials.”
“In the business office we want to collect
more cash faster - more money from
collections with fewer staff.”
“Going forward it's cost. We’ve dealt with
the revenue side over the last four years.”

7. Proprietary – not for distribution
DENIALS MANAGEMENT
January 27, 2012 p7

8. Proprietary – not for distribution
Initial Denials Rate Hard to Calculate
 1/3 of respondents knew their
first-pass denials rate
– 2/3 of these have first-pass
denials rate of >5%
– Ranged from 3% to 17%
 Of those citing write-offs
– ¾ below 1%, none higher than 2%
January 27, 2012 p8
“8-9%. A lot is duplicate billing. Most is overturned &
paid.”
–$1.5B+
7-8% of gross rev (was 14% last year).
–$1.5B+
“No, it’s debated. Probably $25M we could take action
on these earlier (in 1st pass).”
–$750M-$1.5B
“We’re working to get to that number. We focus on
high $$, then highest # of accounts by issue.
–$350-750M
“No good number available for up front – it’s dealt with
in many departments.”
–Less than $350M
“3% first pass - it is a manual tracking process. We
have a field in Access that captures it.”
–Less than $350M

9. Proprietary – not for distribution
SSI, McKesson & Siemens Most Frequently Used
for Claims Submission & Bill Scrubbing
January 27, 2012 p9
0% 10% 20% 30% 40% 50%
Emdeon
MedAssets
Siemens
McKesson
SSI
Other
Systems Used for Claims
Submission
0% 10% 20% 30% 40%
RelayHealth
Data Systems Group
CareMedic
Mckesson
Siemens
SSI
Other
Billing Editors Used
Very
good
22%
Good
63%
Fair
11%
Poor
4%
Satisfaction
“Very effective! Since we’ve
gone live w Epic, it’s almost
too picky - putting in queue
claims that should have billed.”

10. Proprietary – not for distribution
PFS Staff Typically Meet Monthly with Payors, But
Smaller Hospitals Often Do So Only by Phone
January 27, 2012 p10
0%
20%
40%
60%
80%
100%
No Phone-based only yes
Does PFS meet with payors?
Less than $350M $350-750M $750M-$1.5B $1.5B+ Total
0%
20%
40%
60%
80%
100%
Occasionally 2x/year 4x/year 6x/year 12x/year Ongoing
How often does PFS meet with payors?
Less than $350M $350-750M $750M-$1.5B $1.5B+ Total

11. Proprietary – not for distribution
COLLECTIONS AGENCY
MANAGEMENT
January 27, 2012 p11

12. Proprietary – not for distribution
Most Hospitals Use <4 Collections Agencies &
Have <3 FTEs Managing Them
 Hospitals interviewed work with as many as 9 agencies
– 60% of hospitals use between 2 and 4 collections agencies
– No variation by hospital size
 Types of agencies commonly used:
– 3rd Party Liability (i.e. worker’s comp)
– Self-pay
– Early out
– 1st Placement
– 2ndry Placement
– Bad debt
– Int'l bad debt
 1/3 of hospitals have 3-8 FTEs managing agencies
– 2/3 have 2 or fewer FTEs managing agencies
January 27, 2012 p12

13. Proprietary – not for distribution
Collections Agencies Selected Based on
Relationship, But Metrics Important Too
January 27, 2012 p13
0 1 2 3 4 5 6
Agencies splitting accounts compete
Must have HC specialty
Preference for nationally known
Prior experience with them
Ability to integrate with our systems
Preference for local firms
Track record on collections yield
Reputation, word of mouth
Pricing
Good customer service
RFP
Longstanding relationship
How Current Collections Agencies Were Selected

14. Proprietary – not for distribution
Most Hospitals Measure Agency Recovery Rate, But
Many Find Comparing Agency Effectiveness Difficult
 1/3 of hospitals say they assess relative performance of their agencies by using
industry benchmarks or requiring consistent reporting
 Of those that do not, several said this was difficult:
“This is hard to do. Trended, but if only 1 in each niche, we just look at historicals.”
–$350-750M
January 27, 2012 p14
0% 10% 20% 30% 40% 50% 60%
Year over year results
Number of calls/touches per patient
Net collections after fees
Total Dollars Collected
% of accounts placed/returned
Customer service (complaints)
Aging/timeliness
Collection/Recovery Rate
Collection Agency Metrics Tracked by Hospitals

15. Proprietary – not for distribution
Customer Service Most Common Pain Points in
Collections Agency Management
 Customer service concerns cited 6X
 Other pain points include:
– Adherence to contracts on when we place & take back accounts
– Adhering to our policies & procedures
– Automation of files coming back
– Collection ratio
– Data exchange accuracy
– Increasing volume of accts
– Time to conduct agency audits
– Trust - lack of visibility into activity
January 27, 2012 p15

16. Proprietary – not for distribution
Opportunities to Improve Collection Management
January 27, 2012 p16
0% 20% 40% 60% 80% 100%
Account allocations assignments
Track and enforce collection policy
Insight into cash collection performance
Auditing and invoice tracking
Maintaining accurate inventory/Data and process
integrity
Communications and Workflow processes
Visibility into collection activity
Respondents Citing Large or Very Large Opportunity to Improve

17. For further information regarding this report
or related research, please contact:
Actionable Market Insight